Virginia State Real Estate Exam Practice Question
A clause preventing a subsequent buyer from assuming the mortgage is called a:
Correct Answer: C
Rationale: A due-on-sale clause prevents a subsequent buyer from assuming the mortgage, ensuring that the lender can demand full payment if the property is sold. This protects the lender's interests by preventing the transfer of debt without their consent.
A condemnation clause relates to property seizure by the government, not mortgage assumptions. A defeasance clause allows for the cancellation of a mortgage once the debt is paid, which does not address buyer assumptions. A right of first refusal grants a party the option to purchase a property before others, unrelated to mortgage terms. Each of these options serves different legal purposes and does not restrict mortgage assumption as effectively as a due-on-sale clause.
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